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American Water Works Company, Inc. (AWK)

Company Dividend Discount ModelIndustry: Regulated WaterSector: Utilities

Valuation Snapshot

Stable Growth$133.77 - $354.85$204.54
Multi-Stage$94.93 - $103.53$99.15
Blended Fair Value$151.85
Current Price$139.19
Upside9.10%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS10.63%10.48%3.002.732.392.191.991.811.641.481.341.23
YoY Growth--9.96%13.92%9.11%10.03%10.20%10.66%10.38%10.73%9.21%10.65%
Dividend Yield--2.03%2.27%1.63%1.33%1.33%1.51%1.58%1.80%1.72%1.78%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,112.00
(-) Cash Dividends Paid (M)621.00
(=) Cash Retained (M)491.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)222.40139.0083.40
Cash Retained (M)491.00491.00491.00
(-) Cash Required (M)-222.40-139.00-83.40
(=) Excess Retained (M)268.60352.00407.60
(/) Shares Outstanding (M)195.00195.00195.00
(=) Excess Retained per Share1.381.812.09
LTM Dividend per Share3.183.183.18
(+) Excess Retained per Share1.381.812.09
(=) Adjusted Dividend4.564.995.27
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$133.77$204.54$354.85
Upside / Downside-3.90%46.95%154.94%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,112.001,184.281,261.261,343.241,430.551,523.541,569.24
Payout Ratio55.85%62.68%69.51%76.34%83.17%90.00%92.50%
Projected Dividends (M)621.00742.26876.671,025.401,189.781,371.181,451.55

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)673.97680.36686.75
Year 2 PV (M)722.78736.55750.44
Year 3 PV (M)767.63789.67812.12
Year 4 PV (M)808.74839.84871.83
Year 5 PV (M)846.30887.18929.62
PV of Terminal Value (M)14,691.7915,401.4116,138.19
Equity Value (M)18,511.2219,335.0120,188.96
Shares Outstanding (M)195.00195.00195.00
Fair Value$94.93$99.15$103.53
Upside / Downside-31.80%-28.76%-25.62%

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